Legal Question in Bankruptcy in California

Will a trust protect property during bankruptcy?

My brother and I are benificiaries of a trust set up by my deceased grandmother. It is a 2 unit rental property. He may be filing bankruptcy. How will this affect the trust? Can they put a lien on it?


Asked on 3/13/07, 6:41 pm

1 Answer from Attorneys

Judith Deming Deming & Associates

Re: Will a trust protect property during bankruptcy?

When a debtor files bankiruptcy, they are required to list all interests they have in any property, income, etc., including listing any trusts in which they are beneficiaries. A failure to do so is bankruptcy fraud and a federal crime. The trustee in bankruptcy has the right and the ability to liquidate any such interest in order to generate funds to pay the creditors of your brother. Even if the trustee does not put a formal "lien" on the property, in the event it is sold or transferred without bankruptcy court approval during the pendency of the bankruptcy, any such sale or transfer can be set aside (invalidated).

Read more
Answered on 3/15/07, 2:34 pm


Related Questions & Answers

More Bankruptcy Law questions and answers in California